Guaranteed stop loss in Forex
Guaranteed stop loss is not a common practice with Forex brokers as one would expect.
The list below shows all Forex brokers who offer guaranteed stop losses.
But first, let’s briefly touch the theory.
Guaranteed stop loss vs Regular stop loss
Guaranteed stop loss — your stops are executed at the requested price level no matter what.
Regular stop loss — your stops are subject to market volatility and best available price, execution not guaranteed.
Does it really matter which stop loss to use?
The answer is “Yes”, if a trader plans to trade during volatile markets (e.g. Non-farm payroll, other news releases), if high leverage is used, a traders chooses one of the volatile currency pairs, and/or if traders are unable to monitor their open positions on a regular (at least daily) basis.
The answer might be “No”, if none of the above applies. However, the risks are still there.
What are the risks? Price Gaps and Slippage.
How Price Gaps and Slippage affect Stop loss
Price Gaps — the price changes so quickly that there is a visible gap on the chart. All orders caught in the gap are not filled. All stops caught in the gap are not executed.
Slippage — the price has changed relatively quickly and there was not enough time to fill the stop order at a requested level. As a result the stop is filled at the next best available price, incurring slippage.
There are no gaps, so you won’t even see it on the chart.
Getting “slipped” on the stop loss is not as bad as getting caught in a gap. With slippage your stop loss is executed anyway, although not at desired price. While with gaps your stop is not executed at all, and you need to close the trade manually.
Price gaps and slippage don’t affect guaranteed stop losses. With guaranteed stop losses your order is executed in all market conditions, every time and any time. It’s guaranteed.
Or is it? When your broker makes claims about Guaranteed stop losses, read the fine print. Read the Terms & conditions. You may find that some brokers “would do their very best” to provide your with a guaranteed stop loss, but if it’s “beyond their control” (technical or other) your stop will not be honored.
Forex brokers that offer Guaranteed stop loss
“Guaranteed Stop Loss Orders (GSLO) eliminate the risk of slippage on orders, caused by volatility or the gapping of prices, whatever the cause… a premium is charged for attaching a Guaranteed Stop Loss Order.”
ETX Capital “You want full access to tools such as complex order types, trailing stops and guaranteed stops”. A premium should be paid for this service.
ForexCT “Do you offer free guaranteed stop losses? Yes. Regardless of currency volatility or market gapping, we always guarantee stop losses on every single forex trade.”
“Attaching a guaranteed stop puts an absolute limit on your potential loss. Even if the market gaps suddenly, your position will be closed out at exactly the price you specified, with no risk of slippage… subject to an additional charge.”
“Even if the market gaps suddenly, the position will be closed out at exactly the price specified, with no risk of slippage. “Guaranteed Stop” is available for specified instruments only.”
“Trading 212 provides guaranteed stop loss during trading hours.”
Forex broker with Guaranteed = Regular stop loss
Easy-Forex“easy-forex® makes all efforts to guarantee rates, when it is able to do so, unless market conditions prevent delivering the rate selected.”
“Dukascopy Bank guarantees the execution of Stop Loss orders. However, during fast markets or gaps, there is a risk of large slippage.”
“Guaranteed stop loss levels*”